ENTHUSIASM expressed by Amtrak for high speed rail corridors across North America in the wake of the Acela Express launch is to be welcomed. On p460, Barbara Richardson suggests that there is considerable support for the concept at both federal and state level. But any amount of optimism cannot mask the dire state of Amtrak’s finances.
An ominous sign emerged on June 5 when Amtrak revealed that it was proposing to mortgage part of New York City’s Pennsylvania Station for $300m. The plan became public when Amtrak, as required by law, sought (and received) approval from the Department of Transportation.
Amtrak is more than $3bn in debt, with borrowings to finance capital projects such as rolling stock, stations and maintenance facilities. The latest $300m deal is needed to cover normal operating expenses until October 1, when the government’s next fiscal year begins and a new round of subsidy will commence.
Transportation Secretary Norman Mineta minced no words in declaring that ’Amtrak is facing very, very serious financial problems.’ He also flatly declared that Amtrak will not meet its goal of eliminating public subsidies by fiscal year 2003. Echoing suggestions made by other critics, Mineta said a serious study should be made of winding up Amtrak’s long-distance routes, leaving only the busy Northeast Corridor and West Coast lines plus a few services focused on Chicago - a scenario laid out when Congress established the Amtrak Reform Council to oversee the railway’s progress in weaning itself from subsidies.
Amtrak tried to put a brave face on the controversy, blaming the shortfall in operating funds on the year-long delay in Acela Express deliveries. President & CEO George Warrington said Amtrak was ’fundamentally committed to reaching operational self-sufficiency by the congressionally-mandated deadline in 2003.’ But during a speech to the National Press Club in May, he had warned that ’you cannot meet a mandate to run a national network and operate in a true, profitable, commercial sense. For 30 years Amtrak has been expected to perform like a business and at the same time serve community needs like a non-profit organisation. We cannot do this.’
Meanwhile, a report from the government’s General Accounting Office shows a 7% gain in revenue during the first six months of Amtrak’s current fiscal year, offset by an 8% rise in expenses.
